THE INSIDER’S GUIDE TO BUSINESS AND LIFESTYLE A I va nc il l ab u le d o i n ng in te rn at io na l f li gh ts Issue 192 February 2010 HuntingHunting forforjjewelsewels SAMSAM secursecureses toptop COVER STORY prpropertyoperty fundfund rankingranking PRIME & PRESSURE Mr Henrik Vu,Mr Louis Nguyen and Mr Desmond Lin of Saigon Asset Management (SAM) Vietnam . US$5.00 Britain . £6.90 France . FF50 Hong Kong . HK$75.00 Malaysia . Rgt 18.00 Singapore . S$10.00 Switzerland . SFr12.00 Thailand . Baht175 Australia . A$13.00 Canada . C$13.75 Germany . DM15 Japan . ¥850 Philippines . P175.00 South Korea . Won6,500 Taiwan . NT180 USA . $10.00 CEO COLUMN TopTop GunGun investorinvestor Vietnam Property Holding (VPH) has been ranked the top real estate fund in Vietnam by LCF Rothschild. Mr Louis Nguyen, CEO of Saigon Asset Management (SAM) - VPH’s investment manager - tells VET’s Xuan Son of the reasons why. VIETNAM ECONOMIC TIMES, FEBRUARY 2010 10 CEO COLUMN I In 2009, Vietnam Property Holding (VPH) was ranked as the Top Real Estate Fund in Vietnam by LCF How do you explain VPH’s top ranking Rothschild after securing third position in 2008. in the context of Vietnam’s difficult eco- Vietnam Property Holding (VPH) is a Cayman Islands exempted company created to engage in prop- nomic situation in 2009? erty investment in Vietnam. VPH is managed by Saigon Asset Management (SAM) an exempted compa- Real estate investments are usually long ny incorporated under the laws of the Cayman Islands. SAM’s investment team draws on the talents of term and may face lack of liquidity until international and domestically-trained professionals from top fund management companies in Vietnam, exit and are often complicated for foreign complemented by a seasoned board of directors consisting of Vietnamese senior executives with deep- investors due to the overall regulations rooted local knowledge and relationships. Corporate governance and the value creation process are concerning ownership rights, land com- enhanced by international advisors with demonstrated corporate influence regionally and globally. pensation, and licensing. The typical The principal investment objective of the Company is leveraging its local investment team and net- model most funds take is an equity posi- work to invest in attractive real estate projects and companies. VPH seeks to maximize capital gain from tion in a real estate project or a blue-chip investing in a diversified portfolio of Vietnamese properties and companies. In 2010, VPH plans to property-focused company. We try to be increase exposure in small and mid cap real estate companies with strong growth potential and ade- slightly more innovative by searching for quate liquidity. The fund will also search for bank guaranteed deals with convertible options as well as debt deals with bank guarantees. At the seek out strategic partners to co-invest and develop projects. end of the term we can walk away with a reasonable return or convert it into equity. Another approach we use is to go after list- ed companies with hidden assets and great potential value. These are what we call the “jewels”. These two approaches were what Fund structure • Closed-end, listed on the Frankfurt Stock Exchange (FSE) and XETRA gave us a slight edge in return for 2009. VPH security information • Reuters 3MT.DE Finding these deals requires investigation • Bloomberg 3MT:GR and due diligence in the field and an abil- • ISIN KYG9361R1074 ity to fit in, speak the local language and • German Securities Code A0M12W understand local customs, while continu- Life of fund • Vote every five years to continue ously building relationships with strategic Investment range • $2 million - $10 million partners and brokers. • Not to exceed 20 per cent of NAV in one single investment Price provider/Market maker • 886 AG, Jefferies International, LCF Rothschild I Vietnam’s difficult economic situation Fees • 2 per cent management fee has led to its property market becoming partly frozen over the last few months. • 20 per cent incentive fee of total increase in NAV over hurdle rate of 8 per cent, How did this affect VPH during the with high watermark and catch up third and fourth quarters of 2009? Tax advisor • Ernst & Young While the real estate market experienced Auditor • Grant Thornton a difficult situation in the second half of Custodian/administration • Deutsche Bank 2009, the listed securities market actually Legal advisors • Reed Smith, USA, Germany fared much better. We were able to increase • Appleby, Cayman Islands NAV due to our investments in listed real estate companies and bank guaranteed deals, as mentioned above. We diversified asset classes to listed securities in response to the freeze. In addition, we were able to Established in 2007, Saigon Asset Management (SAM) is the investment manager for Vietnam Equity realise some returns from the debt deals. Holding (VEH) and Vietnam Property Holding (VPH), which are both Cayman Islands Vietnam-focused Lastly, and fortunately, we stayed away investment funds listed on the Frankfurt Stock Exchange and Xetra. SAM is currently managing approxi- from early-stage or greenfield real estate mately US$125m of assets, including listed securities, private equity, and real estate assets. SAM is deals, many of which ended up being deval- based in Ho Chi Minh City, Vietnam, and currently employs over 20 financial professionals. For more ued by year end. Instead, we focused on information, please visit www.saigonam.com small and mid cap securities as well as the lucrative bank guaranteed deals. I Looking to 2010, do you think VPH continue to lead and replace foreigners on Cash is still king and the kings appear to be will maintain its 2009 top ranking? the buy side. On the commercial side, we Vietnamese (no longer foreigners). We That would be nice, but I’m sure our see good opportunities to buy back com- would prefer more exposures in middle-end competitors will not feel the same so we all pleted office and hotel properties instead of residential and retail projects. will have to work pretty hard, which ulti- developing new ones, or to take the head- mately will be good for investors and the lease for sub-lettings. The downturn has I What should authorities do to resolve Vietnam market. Being a younger fund we made existing properties more attractive the partly-frozen property market? will take advantage of our size, mobility than building from scratch. The retail side Real estate is a very large investment and hunger to deserve the top slot. is expected to continue to boom as focus for Vietnam. While the country is Rankings aside, our top objective is still an investors are positioning for WTO com- still in its early stages of development, par- attractive absolute return for our investors. mitments to be lifted fully by early 2012. ticipants should join together in creating a We believe in having a consistent and con- On the residential side we see that township more investor-friendly environment. It tinuous growth in attractive return year- and large-scale complexes will continue to would be nice to see further encouragement over-year rather than relative rankings. struggle with land clearance and compensa- for foreigners to buy and own properties. tion while greater real demand for afford- Programs providing interest subsidies for I How do you view Vietnam’s property able housing and middle-end residential first time property buyers are always a plus. market in 2010? sectors will lift these areas. The recent open Taxation and the legal framework on land In general, we see an increasing trend of policy for overseas Vietnamese and foreign- and housing markets should be addressed dispositions of properties rather than acqui- ers to own apartments will likely push regularly to monitor the market in a more sitions, and local developers and investors prices in the residential market higher. efficient way. I 11 VIETNAM ECONOMIC TIMES, FEBRUARY 2010.